What is the firm horizon or continuing value

Assignment Help Financial Management
Reference no: EM131346178

Hart Enterprises recently paid a dividend of $1.25. It expects to have nonconstant growth of 20% for 2 years followed by a constant rate of 5% thereafter. The firm's rate of return is 10%.

A) How far away is the horizon date?

B) What is the firm's horizon or continuing, value?

C) What is the firm's intinsic value today?

Reference no: EM131346178

Questions Cloud

Discuss what this means in terms of the risk of the index : In addition to treasury securities, some government agencies issue bonds. Name three such agencies, and state how the funds were used. Also, review the firms currently listed in the Dow Jones Industrial Average. How many are technology related? Discu..
The functional currency for the subsidiary : Fenwicke Company organized and began operating a subsidiary in a foreign country on Jan. 1, 2015, by investing LCU 40,000. This subsidiary immediately borrowed LCU 100,000 on a 5-year note with 10 percent interest payable annually beginning on Jan 1,..
Two companies are looking at the same project : Now, suppose that two companies are looking at the same project. Company "A" has a beta of 1.5 and a cost of capital of 25%. Company "B" has a beta of 0.8 and a cost of capital of 15%. When evaluated at a rate of 15%, the project shows an NPV of +$5 ..
Give the clients understanding of the boca market : Imagine that you are a real estate agent in Florida and you are working with a retired couple from out of state. The couple is considering purchasing a retirement home in Boca Raton. Identify what might be considered to be the three most significant ..
What is the firm horizon or continuing value : Hart Enterprises recently paid a dividend of $1.25. It expects to have nonconstant growth of 20% for 2 years followed by a constant rate of 5% thereafter. The firm's rate of return is 10%. How far away is the horizon date? What is the firm's horizon ..
Building belongs in structural classification : What would be the total fire insurance premium for Best Seconds if their $837,500 building belongs in structural classification D? The contents are worth $421,300 and they received an area rating of 2. Alana wishes to obtain auto insurance. She wants..
Capital rationing-net present value-internal rate of return : Capital rationing: IRR and NPV approaches Valley Corporation is attempting to select the best of a group of independent projects competing for the firm’s fixed capital budget of $4.5 million. Use the internal rate of return (IRR) approach to select t..
Creating capital expenditure funding proposal : Ted Jones, the Surgery Unit Director, is about to choose his strategy for creating a capital expenditure funding proposal for the coming year. Ted's unit needs more room. The Surgery Unit is running at over 90% capacity. What should Ted decide to ask..
Why is it higher than the yield of the discount bond : Blue and Gold Corp. issues two bonds with 30-year maturities. Both bonds are callable at $1,050. The first bond is issued at a deep discount with a coupon rate of 4% and a price of $580 to yield 7.56%. The second bond is issued at par value with a co..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the stock predicted return

An analyst has modeled the stock of a company using the Fama-French three-factor model. The risk-free rate is 5%, the market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0,..

  Two projects being considered are mutually exclusive

Two projects being considered are mutually exclusive and have the following projected cash flows. If the required rate of return on these projects is 10 percent, which would be chosen and why?

  What are the main aspects of accounting standard

Calculate the net cash flow from financing activities based and discuss in brief the treatment of following items in Cash Flow Statement - Calculate the net cash flow from financing activities

  Calculate the internal rate of return and profitability

Calculate the internal rate of return and profitability index for the proposed investment. What do these two measures tell you about the project's viability?

  Considering leasing arrangement to finance

NetFive Inc. is considering a leasing arrangement to finance some manufacturing equipment’s that is need for the next 3 years. The equipment’s will be obsolete and worthless after3 years. The firm will depreciate the cost of the equipment’s on the st..

  Share and stock is purchased and the option exercised

A put option is purchased for a premium of $200 with an exercise price of $38 per share and a current market price on the stock of $41 per share. What would be the return if the market price declines to $35 per share and the stock is purchased and th..

  Increased current assets net of noninterest

Below is a recent income statement for Gatlin Camera: Calculate Gatlin's free cash flow in this year assuming it spent $510 on new capital equipment and increased current assets net of noninterest-bearing current liabilities $340.

  There are three mutually exclusive alternatives

There are three mutually exclusive alternatives that are candidates for implementation by the Yellow Freight Company’s sorting operations center, and doing nothing is not an option. All alternatives have a life of 10 years, and they have negligible m..

  What is ibm preferred stocks beta with respect to market

Suppose that you own IBM preferred stock that pays an annual, fixed, and perpetual dividend of $10 which is worth $100 per share. The market return is 12% and the risk-free rate is 4%. What is IBM preferred stock's beta with respect to the market?

  What is the principle remaining on the loan

Suppose you take out a loan for $24,475 to purchase a 2016 Nissan Altima. Nissan offers $500 cash back (which you use as part of the down payment), and you also put $2,299 of your own money down (so a total down payment of $2,799).  After three years..

  Firm also has bond issue outstanding with total face value

Delta Lighting has 30,000 shares of common stock outstanding at a market price of $15 a share. This stock was originally issued at $31 per share. The firm also has a bond issue outstanding with a total face value of $280,000 which is selling for 86 p..

  Main differences between fixed and variable annuities

What are the main differences between fixed and Variable annuities? Which type is more appropriate for someone who is 60 years old and close to retirement?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd